Chinese listed firms break out on bourses

Investor sentiment was lifted shortly after the latest positive messages sent by China's top financial regulators, which not only articulated continued support for offshore-listed Chinese companies but also the country's dedication to securing stable capital market operations.

The State Council's Financial Stability and Development Committee said on Wednesday that positive progress has been made regarding US-listed Chinese companies amid continued smooth communication between Chinese and US regulators. The two parties are dedicated to reaching a material cooperation plan. The Chinese government continues to encourage Chinese firms to seek overseas listings, and maintains its support for those Chinese enterprises already listed abroad, said the committee.

Nearly 80 US-listed Chinese companies saw their prices soar over 20 percent on Wednesday, with the Nasdaq Golden Dragon China Index, which tracks US-listed Chinese companies, up by 32.93 percent.

Hong Hao, managing director and head of research at BOCOM International, said that the US stock market is still a very important platform for Chinese technology companies to finance their growth.

Meng Lei, A-share strategist at UBS Securities, said the implementation of the above government signals will influence short-term market performance and foreign investors' trading moves. If Chinese and US regulators can come to a consensus regarding cross-border auditing supervision, recent foreign investor withdrawals from US-listed Chinese companies can be reversed.

The China Securities Regulatory Commission, the country's top bourse watchdog, also stressed on Wednesday the strengthened communication and cooperation between Hong Kong and mainland regulators.

This suggests preparation on both sides for the possible return of some Chinese mainland companies to the Hong Kong exchange, Hong said.

Hong Kong's Hang Seng Index closed 9 percent higher after the central regulator's statements on Wednesday, the biggest daily increase in 40 years. The Hang Seng Technology subindex spiked 22 percent, setting a record.

Such bullish momentum endured on Thursday, with the HSI rising 6.7 percent and Hang Seng Tech up 7.35 percent.

While the CSRC said on Wednesday that qualified companies are encouraged to float on overseas exchanges, A-share listed electric vehicle cell maker Gotion High-tech and Lepu Medical Technology Co Ltd announced on the same day their respective plans to issue global depository receipts on the Swiss bourse.

This was only one day after construction machinery giant Sany Heavy Industry's announcement that it would sell GDRs in the Alpine nation.

Up to this date, four Shanghai-listed companies have issued GDRs in London, which was part of the Shanghai-London Stock Connect mechanism officially launched in 2019. The GDR scheme was extended to exchanges in Switzerland and Germany in February.

The People's Bank of China, the country's central bank, said on Wednesday that different government departments should be better coordinated to safeguard the stable development of the capital market and facilitate the country's stable economic growth.

The China Banking and Insurance Regulatory Commission also said on Wednesday that favorable policies will be introduced and direct financing will be better supported.

The A-share market rebounded strongly on Wednesday. The benchmark Shanghai Composite Index rose 3.48 percent and the tech-heavy ChiNext in Shenzhen spiked 5.2 percent. The rally continued on Thursday with the SCI gaining another 1.4 percent and ChiNext up 2.87 percent.